Online sales help some retailers cushion blow from outbreak

Singapore

THE novel coronavirus outbreak may have turned wary consumers away from malls, but a corresponding shift to online shopping is providing some respite for retailers who previously took pains to build up integrated online sales channels.

Furniture retailer Ikea said it has "no doubt" seen fewer customers than expected in its Singapore stores at this time of the year, although it's unable to assess how much of the drop in footfall was due to concerns around the virus versus the Chinese New Year holiday period.

But the retail giant is also seeing an uptick in online sales, said Corinna Schuler, Ikea's head of corporate communication for South-east Asia. "Typically, around 10 per cent of our home furnishing sales come through our online shop. But last week, we saw that number hit 14.5 per cent."

Like Ikea, some local retailers that have set up online storefronts also see online sales helping to cushion the blow to physical sales.

For example, the hit from the virus outbreak hasn't dented online demand for Awfully Chocolate, even as its stores have been affected by the slump in shopper traffic. The local brand runs 16 stores in Singapore, with most of them in malls.

In the lead-up to Valentine's Day this year, Awfully Chocolate saw online sales double from last year's, said founder Lyn Lee. Online orders generally account for 10 per cent of sales in a month during non-peak periods.

Baby goods retailer Mothercare Singapore's online sales have also "increased significantly", with sales for the month to date more than double that of the same period last year, said managing director Pang Fu Wei.

Homegrown menswear retailer Benjamin Barker said online orders have remained consistent, even though footfall at its retail outlets in Singapore has at least halved.

And for homeware retailer Iuiga, which first started out as an e-commerce business, the rise in online takings may largely offset the decline in physical sales caused by the virus outbreak. "Overall, the effect of the virus was not that pronounced on revenue because our online channels (website and app) have helped to cushion our figures very well," Iuiga's chief growth officer Jaslyn Chan said.

Footfall across its nine retail stores has dropped by about 30 per cent so far, but it has seen online revenue roughly triple in the same period. Normally, online sales contribute about 20 per cent to the brand's overall revenue.

According to the latest official figures, retail sales marked their sharpest decline in six years with a 2.8 per cent fall in 2019. Some analysts have predicted that this year's retail sales are likely to remain weak as a result of the outbreak.

In the meantime, some retailers, like Ikea, are diverting resources to the rise in online orders. "We have specialists in our business who lead staff planning and continually look at expected visitation to make sure that we deploy the right number of co-workers in the right places, to meet our customers wherever and whenever they shop," said Ms Schuler.

Mothercare has temporarily redeployed staff from stores with slower sales to the warehouse to help with picking and packing items.

The company is also putting more focus on promoting relevant products, such as sanitisers and thermometers, in this period.

Iuiga, on the other hand, is tapping its retail staff for insights on ways to serve customers better or products that may sell better now, like home exercise items.

Ms Chan said: "I strongly believe there is both danger and opportunity in such a crisis. People are starting to stay home more because of the virus, but this also means plenty of opportunities for us to develop great products and services based on this observation."